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FTSE 100 closes in red as Wall Street comes off recent highs

London's top tier index closed down nearly 28 points at 7,696
london
FTSE 100 pulled back from earlier highs
  • FTSE 100 closes in red

  • UK house prices unexpectedly drop

  • Micro Focus and Shire down

  • Stricken Carillion to present new business plan

FTSE 100 closed in the red after reaching a new high earlier in the day and as Wall Street stocks paint a mixed picture.

The UK blue-chip benchmark closed down almost 28 points, or 0.36%, to 7,696, while FTSE 250 was also lower - off 76 points at 20,856.

Across the Pond, the Dow Jones lost  over 34 at 25,261 though the broader S&P 500 index was up 19 at 2,743.

In the currency markets, the pound is up 0.40% against the Euro at 1.324, while it is down 0.08% against the US dollar to 1.3556.

"The FTSE quickly hit a fresh record high in early trade as the “January Effect” boosted equities. However, the index was unable to maintain the pace and soon drifted into the red, where it spent most of the day," said Fiona Cincotta, senior market analyst at City Index.

Top riser on Footsie was security firm G4S (LON:GFS), which gained 4.03% to 286.3p,  after Swiss broker UBS upgraded the stock to ‘buy’ from ‘neutral’ and lifted the target price to 310p from 300p.

The big loser was Micro Focus International (LON:MCRO), which tanked 16.92% to 2,145p.

The group warned that revenues for the year to the end of October 2018 would fall by between 2% and 4% from 2017's US$4.2bn.

3.50pm: FTSE 100 drops with Micro Focus the top faller

The FTSE 100 is down 28 points to 7,695, led by Micro Focus and Shire.

 Micro Focus share continued to fall after warning that revenue for the year would fall following disappointing sales from the newly acquired HPE software business.

Shire is on the back foot after it cut its revenue guidance and confirmed it would create two distinct business units for rare disease and hyperactivity medicines.

The move comes ahead of a decision later this year on whether to spin off the hyperactivity medicines arm into a separately listed group.

On a brighter note, G4S is sitting higher on a UBS upgrade and Next continued to gain following a well-received trading update last week.

The pound is down 0.10% versus the dollar at US$1.3557 but up 0.42% versus the euro at €1.1327. 

3.30pm: Vauxhall to cut further 250 jobs at Ellesmere Port

Vauxhall, owned by France’s PGA Group, is to cut a further 250 jobs at its Ellesmere Port car plant following falling demand.

It comes on top of the 400 job cuts announced in October.

“At a meeting held on Thursday 4 January 2018 between representatives from Vauxhall Motors and UNITE the Union, the company explained that although the initial voluntary separation programme at its Ellesmere Port plant announced in October (aligned to adjustment of production volumes in order to protect its future) has been successful, it needs to initiate a further voluntary programme for eligible employees of a further 250 heads in the period from April to the end of September 2018,” it said in a statement. 

3.00pm: AA "astonished" by ousted chairman filing for employment tribunal 

AA plc’s (LON:AA. ousted chairman Bob Mackenzie is seeking an employment tribunal hearing after being sacked for gross misconduct last summer.

The breakdown recovery and car insurance company said in a statement: “We are astonished that Mr Mackenzie is taking this to an employment tribunal.

“We stand by our decision to dismiss him for gross misconduct following his sustained and  violent assault on another employee of the AA, and will robustly defend any action.”

Mackenzie was fired following a physical altercation with insurance chief Michael Lloyd. The spat reportedly centred on Mackenzie’s opposition to Lloyd’s and other members of AA board wanting to explore a merger of the group’s insurance arm with Hastings. 

2.40pm: US stocks open little changed

US stocks opened little changed amid a lack of catalysts to move markets.

The Dow Jones Industrial Average fell 13 points to 25,282, the S&P 500 lost 1 point to 2,741 and the Nasdaq rose 2 points to 7,136.

On the company front, shares in Crocs gained after the footwear maker raised its fourth quarter guidance to between US$195mln and US$198mln.  

Kohl’s Corporation share jumped after same-store sales in November and December were ahead of its retail peers, putting it on track for its best holiday quarter in three years.

In economic data, the only notable release in the US consumer credit report. Later in the session will be speeches from Federal Reserve policymakers.

1.50pm: Oil prices gain 

Oil prices rose, rebounding from declines on Friday, after data showed a weekly drop in the number of US drilling rigs.

West Texas Intermediate crude gained 0.35% to US$61.66 per barrel and Brent crude increased 0.35% to US$67.82 per barrel.

Data from Baker Hughes on Friday showed the number of active US rigs drilling for oil unexpectedly fell by five to 742 last week, indicating that production could slowdown - normally a positive catalyst for crude prices.

12.50pm: US stock futures rise

US stock futures rose after closing with record gains on Friday.

Futures for the Dow Jones Industrial Average increased 40 points to 25,310 while futures for the S&P 500 index edged up 0.2 points to 2,743 and futures for the Nasdaq climbed 0.8 points to 6,668 points. 

Lululemon Athletica shares rose ahead of the opening bell after the maker of yoga gear raised its fourth quarter profit and revenue guidance.

On the downside, Axovant Sciences shares plunged after the biopharmaceutical company said it would discontinue its intepirdine programme for the treatment of dementia after it failing to meet its primary efficacy endpoints in a phase 2 trial.

Later the attention switches to speeches from Federal Reserve officials Raphael Bostic and John Williams.

On this side of the pond, the FTSE 100 has fallen 13 points to 7,710. 

12.00pm: FTSE 100 led lower by Micro Focus

The FTSE 100 edged slightly lower at the midday mark, falling 3 points to 7,720.

“However, the index remained in all-time high territory with a 0.2% increase, and, at 7720, is only a handful of points away from breaking the record set in the initial moments of Monday morning’s trading,” said Connor Campbell, financial analyst at Spreadex.

“If it is to do so then the FTSE needs to overcome the dual obstacles of the 17% plunge endured by Micro Focus International – thank god Mothercare, which is down a nausea-inducing 25%, isn’t part of the UK’s flagship index – and sterling’s 0.3% increase against the euro.”

Micro Focus remained the biggest faller after saying it expects full year revenue to decline while Mothercare slumped after issuing a profit warning.

Paddy Power Betfair is under the cosh after Morgan Stanley downgraded the stock, saying market forecasts for a significant acceleration in online revenue following its new platform integration may not materialise.

Next shares continue to rise following last week’s surprise rise in sales over the Christmas trading period.

Experian rallied after UBS upgraded the stock to ‘buy’ from ‘neutral’ and raised the target price to 1,900p from 1,630p. UBS expects organic growth in 2018 to improve from 4% to 8% for the first time since 2013 following a turnaround in the business to consumer division.

Meanwhile, the pound is down 0.24% versus the dollar at US$1.3539 but up 0.13% against the euro at €1.1295. 

11.30am: Former RBS trader fined by FCA

A former Royal Bank of Scotland Group PLC (LON:RBS) interest rate derivatives trader has been fined £250,000 by the Financial Conduct Authority.

Niel Danziger was knowingly involved in the bank’s failure to observe proper standards of market conduct between 2007 and 2010, the FCA said.

He worked at RBS trading products referenced to Japanese Yen Libor but was dismissed by the lender following a Libor scandal at the end of 2011.

“Proper standards of market conduct reflect the interests of the whole community in the well-being of our financial markets,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

The FCA has banned him from working in any regulated financial activity.

11.20am: Upbeat eurozone data adds to bets ECB will scale back QE

Eurozone retail sales rose 1.5% on the month to November, Eurostat revealed, compared to a 1.1% decline in the previous month. Economists had expected a 1.3% increase.

In other eurozone data, the European Commission said its economic sentiment index rose to 116.0 in December from 114.6 in November, compared to analysts’ estimates of 114.8.

“The eurozone economy ended last year with a flourish and there are certainly no January blues for Mario Draghi and his ECB colleagues after today’s plethora of positive data,” said Dennis de Jon, managing director at UFX.com.

“All the key indicators for December show that confidence amongst investors and consumers is firmly on the rise, which only increases the likelihood of the ECB winding down its quantitative easing programme.”

The ECB's next policy announcement is due on 25 January.

10.40am: Micro Focus the top FTSE 100 faller

Micro Focus remains the top faller on the FTSE 100 after warning that full year revenue will fall 2-4% following the disappointing sales performance of its newly acquired HPE software business.

Numis cut its rating on Micro Focus to ‘add’ from ‘buy’ but raised its target price to 2,980p from 2,800p, saying the company's interims missed the broker's estimates but a lower tax rate than it had expected would boost earnings per share and free cash flow. Shares fell more than 14% to 2,201p.

Paddy Power Betfair shares are 1.8% lower at 8,710p on a Morgan Stanley downgrade to ‘underweight’ from ‘equal-weight’ .

Going the other way, G4S shares jumped 3% to 284p after UBS upgraded the stock to ‘buy’ from ‘neutral’ and hiked its target price to 310p from 300p in a European sector review.

Thomas Cook gained 1.6% to 127p after Morgan Stanley raised its rating on the stock to ‘overweight’ from ‘equal-weight’ and lifted the target price to 140p from 130p.

9.30am: UK house prices fall in December

UK house prices unexpectedly fell in December for the first time in six months, Halifax data revealed.

Prices dropped 0.6% month-on-month in December after a 0.3% rise in November. Economists had expected a 0.2% rise. In the three months to December, prices rose 2.7% year-on-year, slowing from a 3.9% rise in November.

Shares in housebuilders Persimmon, Taylor Wimpey, and Barratt Developments, dropped following the report.

“Halifax’s data suggest that the recent jump in new mortgage rates has poured cold water on a market that already was flagging,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“Looking ahead, the recent further decline in new buyer interest reported by RICS and NAEA, as well as the drop in consumer confidence, indicates that upward pressure on prices will remain modest.”

“Furthermore, we remain concerned that new mortgage rates will rise further from the end of February, when new lending by banks no longer will generate borrowing allowances from the Term Funding Scheme.

“The recent reforms to stamp duty for first-time buyers and further reductions in the number of existing homes coming on to the market, however, should ensure that prices stabilise, rather than fall outright, in 2018.”

8.40am: FTSE flat at the open

The FTSE 100 was trading broadly flat at the open as investors exercised caution ahead of a slew of Christmas trading updates from UK retailers this week. 

London's top tier index dipped 0.09% to 7,171 points as the pound egded up 0.04% verus the euro at €1.1285 but fell 0.26% against the dollar at US$1.3536.

This week sees a string of trading statements from UK retailers, including Morrisons, Sainsbury’s, Tesco, Marks & Spencer. Last week, Debehams reported a disappointing trading update while Next delivered a suprise to the upside.

Micro Focus was the top faller after warning that revenues from the newly acquired software business of Hewlett Packard Enterprise would continue to decline as it integrates the division. 

Carillion, on the other hand, jumped following news that the troubled contractor would this week unveil a revised business plan in a bid to avoid collapse. 

In economic data, Halifax revealed house prices fell 0.6% in December compared to the previous month. Shares in housebuilding stocks, including Barratt Developments and Perismmon, dropped. 

Across the pond and after the closing bell, the focus will turn to speeches from Federal Reserve officials Raphael Bostic and John Williams for any hints on the central bank's plans for interest rates.

Proactive news headlines:

Asiamet Resources Ltd (LON:ARS) has secured a long-term production licence for its Beutong copper project in Indonesia. Drilling will now be undertaken to determine how big the project could become. Asiamet currently holds a 40% stake, but that could move to 80% if certain milestones are passed.

AFC Energy (LON:AFC) has confirmed the successful development and operational validation of its enhanced fuel cell stack and cartridge that incorporates numerous design enhancements initiated over the past 12 months. The AIM-listed industrial fuel cell power company said the results achieved to date from operating the fuel cell provide outputs closely matching the results observed from months of extensive computational simulation, therefore providing further confidence in overall performance.

Solo Oil PLC (LON:SOLO) executive chairman Neil Ritson described himself as happy with the planning for the further development of the group’s 25%-owned Ntorya gas project, onshore Tanzania.

New research has shown ANGLE PLC’s (LON:AGL OTCQX:ANPCY) liquid biopsy could help provide a breakthrough in the treatment of late-stage prostate cancer For the company’s Parsortix system can be used to measure the expression of androgen receptor splice variant 7, or ARV7 for short.

Obtala Limited (LON:OBT) said it expected the good momentum seen in the fourth quarter of 2017 to result in record annual revenue, with solid contributions from all its divisions - forestry production, timber trading and agriculture.

RNA therapeutics specialist Silence Therapeutics PLC (LON:SLN) has told investors it is well funded as it looks to press ahead in 2018. At the beginning of this month, Silence had £43mln of cash in the bank compared to ‘just’ £29.8mln at the end of June.

Shares in Netscientific PLC (LON:NSCI) bumped higher on Monday morning after its ProAxsis portfolio company received EU approval for its ProteaseTag Active Plasmin Immunoassay. The award of the CE mark means the product conforms with various EU health, safety and environmental standards and is safe for sale within Europe.

Bango PLC (LON:BGO), the mobile payments company, has partnered with Netflix to launch carrier billing for Netflix sUBScriptions in Mexico. It added that trading in 2017 was in line with expectations.

Stop me if you have heard this before but H&T Group PLC (LON:HAT) has again raised profits guidance for the year just ended after a strong fourth quarter that was boosted by the strong gold price.

BATM Advanced Communications Limited (LON:BVC) has been awarded a significant contract to supply a cyber-communication technology solution to a government defence department.

Amyrt Pharmaceuticals PLC (LON:AMYT) has inked an exclusive distributor agreement for Lojuxta in Switzerland.

Victoria Oil & Gas PLC (LON:VOG), in a statement after Friday’s market close, revealed that an arrangement with one of its gas customers in Cameroon has expired. The company told investors that ENEO Cameroon informed VOG sUBSidiary Gaz du Cameroun (GDC) that it is not currently in a position to extend a gas supply agreement which expired at the end of 2017, and as such the customer has stopped receiving gas from the company.

Shanta Gold Ltd (LON:SHG) has now confirmed Luke Leslie in the role of chief financial officer after he took on the role on an interim basis last September. Shanta chief executive Eric Zurrin said that Leslie had already achieved significant cost savings for the company. Leslie is also a long-standing board-member of Kincora Copper (CVE:KCC).

RM Secured Direct Lending PLC (LON:RMDL), the investment trust specialising in secured debt investment said that, in accordance, with its investment policy, it has now closed or entered into binding commitments for investments by its C share portfolio with a total value of £22mln. The firm said of this amount, £15mln has been cash funded with the remainder expected to be drawn down by the end of January.

6.50am: FTSE to make tentative start

The FTSE 100 is expected to creep into positive territory, buoyed by Asia and another record close on Wall Street.

Spread betting firms are predicting the index of blue chip shares will edge nine points higher to 7,733.22.

“After an ideal opening week for equities in 2018, traders will be testing the waters early on Monday for signs of a reality-check,” said David Madden of CMC Markets. 

The focus of the week will be the deluge of post-Christmas trading updates from the retail sector.

Next (LON:NXT) provided a tonic last week, but investors were soon brought back to reality by the poor performance of department stores group Debenhams (LON:DEB).

Scheduled are trading statements from Marks & Spencer (LON:MKS), John Lewis, Tesco (LON:TSCO), Morrisons (LON:MRW), Sainsbury (LON:SBRY), ASOS (LON:ASC) and Ted Baker.

The house builders will also give their take on market conditions.

Outside the UK, US fourth quarter earnings and inflation data will dictate sentiment among US investors.

  • Pound worth US$1.3557, down 0.10% 
  • Gold US$1,319 an ounce, down 0.01%
  • Brent crude US$67.58 a barrel, down 0.06%

Financial Times

Two Apple investors are pressuring the iPhone maker to address concerns over smartphone addiction and the mental health effects of phone use among children, in a rare example of activist investors zeroing in on a public health issue rather than financial matters.

The growth of Royal Dutch Shell’s oil and gas operations in the next decade will depend on shale production, its chief executive has said, in the latest sign of western energy groups pinning their hopes for expansion on those “unconventional” resources.

Metrovacesa plans IPO as investors eye Spanish property market: One of the Spanish property groups that blew up most spectacularly during the global financial crisis is planning a return to the stock market.

Celgene, the acquisitive drugmaker, has agreed to buy Impact Biomedicines for US$1.1bn upfront and a further US$1.25bn, dependent on successful regulatory approvals of the biotech company’s blood cancer drug.

The £49bn BT pension scheme is set to pull its administration back in-house after terminating a contract with Accenture three years into an eight-year deal.

Airbus could be hatching a last-ditch plan to save production of the A380 by wooing the Chinese with an offer to help to manufacture the 600-seat superjumbo in return for orders for the US$440 million-a-time jetliner.

Times

Carillion faces crunch meeting with its lenders: The future of the company, a specialist in delivering government services and construction projects, has been in the balance since a profit warning in the summer and after losses of more than £1bn sent its share price crashing by more than 90%.

Ministers have been asked to come up with plans to secure the future of the Vauxhall car plant at Ellesmere Port and to promote it as a factory in the vanguard of the electric vehicle revolution.

Independent

Japanese firm Takata at the centre of the largest auto parts recall in history after faulty air bags are linked to deaths.

UK consumer spending in 2017 slumped to lowest level in five years, research reveals.

Daily Telegraph

Accounting giant KPMG is no longer advising on the Grenfell Tower inquiry after campaigners said the government’s decision to appoint the firm was a conflict of interest.

UBM has taken its final step from magazine publisher to events company after striking a deal to sell its last major publication, the construction industry bible Building.

Confidence among Britain’s businesses appears brittle as fears about trade and economic growth have escalated in a trio of surveys.

Guardian

New Look is coming under fresh pressure after an insurer stopped selling cover against insolvency to its suppliers, in the latest sign of difficulties for retailers amid a squeeze on consumers’ spending power.

Britain’s manufacturers are more upbeat about the state of the global economy than at any time since 2014 and believe demand from overseas will sustain their businesses through another year of Brexit uncertainty, a survey has shown.


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